Glogower v. Pulitzer Broadcasting Co.
| Citation | 92 F.3d 1185 |
| Decision Date | 02 August 1996 |
| Docket Number | WLKY-TV,No. 95-5108,95-5108 |
| Parties | NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit. Andrew G. GLOGOWER, Plaintiff-Appellant, v. PULITZER BROADCASTING CO. d/b/aChannel 32; Bruce Dunbar, Defendants-Appellees, Patrick Watts, Defendant. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
Before: MILBURN and BOGGS, Circuit Judges; and BORMAN, District Judge. *
Plaintiff Andrew G. Glogower appeals the jury verdict for defendants Pulitzer Broadcasting Company and Bruce Dunbar in this diversity action for defamation and false light. On appeal, the issues are (1) whether the district court erred in its instructions to the jury regarding fiduciary duty and the substantially true rule, and (2) whether the jury verdict was against the weight of the evidence. For the reasons that follow, we affirm.
In 1982, plaintiff Andrew G. Glogower purchased a third party administration from an insurance business in Louisville, Kentucky. The assets of the business were then transferred to Glogower's newly formed company, National Benefit Administrators, Inc. ("NBA"). In functioning as a third party administrator, NBA provided administrative services such as investigating, processing, and paying claims for several self-insured employee health care plans. These plans are known as "welfare benefit plans" under the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001, et seq. NBA was paid a monthly fee based on a per capita charge for each covered employee.
NBA compensated Glogower pursuant to an August 1, 1982 employment agreement which set Glogower's salary at $150,000 per year plus an additional 10% per year. In the beginning, NBA had few clients and could not afford Glogower's salary but carried his unpaid salary forward as an account payable. Glogower was not compensated in 1983 or 1984. He was never paid his full salary until 1989. 1 In 1989, Glogower was paid $991,700. He was paid $303,100 in 1990. The increased compensation was due to NBA's increased profits from one of its clients, the Mid-America Soft Drink Bottling Trust ("Mid-America").
Mid-America was a multiple employer health care trust comprised of employers in the bottling industry. Mid-America was underfunded. In August of 1987, the trustees for Mid-America made several changes to the health care plan in an effort to cure the plan's financial problems. The trustees converted the plan into a Multiple Employer Welfare Arrangement under ERISA, 29 U.S.C. § 1002(40). The trust was renamed the National Business Association Trust ("NBAT").
After the meeting of the trustees, Glogower met with NBAT's Executive Director, Doug Walsh. The two men negotiated a new service agreement with NBA that expanded NBA's services to include underwriting and marketing. NBA's monthly fee was to be 20% of all NBAT employer contributions. The parties signed an Agreement for Plan Supervisor which gave NBA authority to handle the day-to-day affairs of NBAT. This included the ability to draw checks on NBAT's bank account in order to pay medical claims and to pay NBA's monthly service fee.
In marketing, NBA used the term "NBA Group" to refer to NBA, NBAT, Advantage Corporation, Advantage Medical Review Corporation, and Advantage Pharmaceutical. NBA owned stock in all of the entities referred to as NBA Group except for NBAT.
NBAT experienced much growth from 1987 to 1990. NBA's income from NBAT accordingly increased. For the fiscal years, NBA's gross revenue from Mid-America and NBAT was $151,952 in 1985; $120,744 in 1986; $195,507 in 1987; $1,096,026 in 1988; and $3,665,959 in 1989.
The increased revenue from NBAT partially accounted for Glogower's higher salary in 1989 and 1990. Glogower was not only being compensated for his unpaid salary from the prior years but he was also given a bonus to be used to repay money which he had borrowed from NBA. Included in the funds given to Glogower by NBA in 1989 and 1990 was $395,000 distributed to Glogower in response to four check requests he had made. Glogower had requested the money from NBA on forms developed by NBA to document its miscellaneous corporate expenses.
In late 1989, NBA began trying to acquire a "shell" insurance company. The seller required that an audit of NBA and NBAT be performed. James Terbeest, of Ernst & Young, began an audit which revealed that NBAT and NBA were not commingling money but that Glogower and NBA were. Terbeest was alarmed by the negative net worth of NBAT and refused to certify it as a "going concern." Because NBA needed a going concern opinion and would not be able to obtain one, Glogower ended the audit.
In the summer of 1989, NBA began receiving inquiries about NBAT from several state departments of insurance. The state of Georgia determined that NBAT was subject to its insurance laws and would have to comply. NBAT, however, could not do so as it had been operating on a claims-made basis and had not maintained any loss reserves as insurance companies are required to do. In October of 1990, Georgia issued a cease and desist order restraining NBAT and NBA from doing any business in the state except for paying claims. Similar orders were later issued by the states of Florida, Alabama, and Virginia. It was during this time that Glogower was receiving a large amount of funds from NBA in the form of unpaid salary and bonuses to repay loans he had received from NBA.
As a result of NBAT's financial problems, many employers withdrew from the plan, and new employers refused to join. In June of 1990, the Kentucky Department of Insurance placed NBAT in receivership. NBAT's collapse left many policyholders without insurance coverage and with unpaid medical bills. This ceased the business operations of NBA due to the loss of its major client and the surrounding publicity.
Ultimately, the collapse of NBAT was reported to have left 45,000 uninsured people across the country and between $12 million and $15 million in unpaid medical bills.
The publicity surrounding the collapse of NBAT placed blame in two directions: Andrew Glogower and the Kentucky Department of Insurance. Glogower was accused of charging NBAT an excessive rate and of mismanagement. The Kentucky Department of Insurance was blamed for not acting sooner when it was aware of NBAT's problems, thereby preventing further losses.
In 1991, Bruce Dunbar, the news anchor for WLKY-TV, Channel 32, which was owned by defendant Pulitzer Broadcasting Company, investigated the controversy surrounding NBAT and NBA. In the course of his investigation, he interviewed Patrick Watts, the general counsel for the Kentucky Department of Insurance. Mr. Watts told Dunbar that health care funds were taken from NBAT, given to NBA, and then distributed to Glogower. Watts showed Dunbar photocopies of Glogower's four check requests submitted to NBA totalling $395,000.
On May 8, 1991, the third segment of Dunbar's report entitled "Health Unsurance" was aired on Channel 32. The broadcast began with an interview of two sisters who had been left with unpaid medical bills as a result of NBAT's collapse. Dunbar proceeded to describe the collapse of NBAT as it was closed down by the Kentucky Department of Insurance. Dunbar reported that, at the time of NBAT's collapse, it had debts totalling $15 million and assets totalling only $890,000. Dunbar then interviewed Patrick Watts who explained that "money was drained from NBAT into NBA and then into the pockets of individual people." Appellant's Brief at 14. Dunbar stated that Glogower was one of those people and showed his picture on the screen. Watts then stated that Glogower had made check requests.
What followed was a series of four "mock checks" displayed on the screen, all payable to Andrew Glogower from NBAT, totalling $395,000. The first check dated October 6, 1989 was for $60,000. "None given" was listed as the reason for the check. Appellant's Brief at 15. The second check dated October 8, 1989 was for $130,000. "To be determined" was the reason given. Id. The third check dated December 5, 1989 was also for $130,000. "None given" was listed as the reason for the check. Appellant's Brief at 16. The fourth check was for $75,000 and was dated May 26, 1990. "A short term loan" was the reason given. Id. Dunbar then stated: "Altogether, Andrew Glogower got $395,000 of NBAT policyholders' money over a six month period." Id.
Dunbar reported that Glogower would not comment upon advice of counsel but that one of Glogower's attorneys had stated that the allegations could not be substantiated. The broadcast mentioned Glogower's wealthy lifestyle which included a Porsche sports car and a residence in an exclusive neighborhood. The broadcast concluded with teary-eyed allegations from one of the sisters that Glogower had her money.
Following the broadcast, pursuant to KRS § 411.061, 2 Glogower served a demand for correction upon WLKY-TV due to its directly false report that he had taken money from NBAT. Within the statutory time for response, WLKY-TV aired a correction on May 23, 1991. The correction stated in part:
[w]e incorrectly reported that Andrew Glogower, the chairman of the Board of NBA, Incorporated, withdrew $395,000 from National Business Association Trust, NBAT. In fact, Mr. Glogower withdrew $395,000 from National Benefit Administrators, Incorporated, NBA, another member of NBA Group.... Neither Mr. Glogower nor his attorney disputes the fact that thousands of policyholders were left with no coverage even though they had paid their premiums.
Appellant's Brief at 17. The broadcast also corrected the three errors it had made in the dates of the checks.
On May 24, 1991, plaintiff Glogower filed this diversity action seeking damages for defamation and false...
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